Question 1

To say that two goods are complements, their cross price elasticities of demand should be:

Accepted Answer

A)  less than zero. 
B)  equal to zero. 
C)  positive, yet almost equal to zero. 
D)  greater than zero. 
A)  less than zero. 
B)  equal to zero. 
C)  positive, yet almost equal to zero. 
D)  greater than zero.

Question 2

The cross price elasticity of demand for complements is:

Accepted Answer

A)  negative. 
B)  positive. 
C)  equal to 1. 
D)  positive only for normal goods. 
A)  negative. 
B)  positive. 
C)  equal to 1. 
D)  positive only for normal goods.

Question 3

Use the following to answer question(s):  
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?

Accepted Answer

A)  -0.60 
B)  -0.82 
C)  -1.0 
D)  -1.6 
A)  -0.60 
B)  -0.82 
C)  -1.0 
D)  -1.6

Question 4

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then, for you, shoes are considered a(n):

Accepted Answer

A)  normal good. 
B)  inferior good. 
C)  complementary good. 
D)  substitute good. 
A)  normal good. 
B)  inferior good. 
C)  complementary good. 
D)  substitute good.

Question 5

The price elasticity of supply for a good is 3 if:

Accepted Answer

A)  a 1 percent increase in price leads to a 3 percent decrease in quantity supplied. 
B)  a 1 percent decrease in price leads to a 3 percent decrease in quantity supplied. 
C)  a 9 percent decrease in price leads to a 3 percent decrease in quantity supplied. 
D)  None of the above are true. 
A)  a 1 percent increase in price leads to a 3 percent decrease in quantity supplied. 
B)  a 1 percent decrease in price leads to a 3 percent decrease in quantity supplied. 
C)  a 9 percent decrease in price leads to a 3 percent decrease in quantity supplied. 
D)  None of the above are true.

Question 6

Use the following for questions 128-130.
Exhibit: Nonlinear Demand Curve
  
-(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

Accepted Answer

A)  displays the same percentage changes in quantity as the percentage changes in price, for all price changes shown in the exhibit. 
B)  has lower total revenue as price falls. 
C)  is price elastic throughout. 
D)  is price inelastic throughout. 
A)  displays the same percentage changes in quantity as the percentage changes in price, for all price changes shown in the exhibit. 
B)  has lower total revenue as price falls. 
C)  is price elastic throughout. 
D)  is price inelastic throughout.

Question 7

The arc price elasticity of demand method is best used for:

Accepted Answer

A)  small changes in price. 
B)  large changes in quantity demanded. 
C)  large changes in both price and quantity demanded. 
D)  infinitely large changes in price. 
A)  small changes in price. 
B)  large changes in quantity demanded. 
C)  large changes in both price and quantity demanded. 
D)  infinitely large changes in price.

Question 8

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

A)  0. 
B)  -0.5. 
C)  -1. 
D)  -2. 
A)  0. 
B)  -0.5. 
C)  -1. 
D)  -2.

Question 9

The concept of cross price elasticity of demand refers to the:

Accepted Answer

A)  ratio of the percentage change in the quantity demanded of a good at a specific price to the percentage change in the price of a related good. 
B)  ratio of the percentage change in the price of one good to the percentage change in the quantity demanded of a related good at a specific price. 
C)  ratio of the price elasticity of a normal good to the price elasticity of a related good. 
D)  change in income due to a change in the price of a related good. 
A)  ratio of the percentage change in the quantity demanded of a good at a specific price to the percentage change in the price of a related good. 
B)  ratio of the percentage change in the price of one good to the percentage change in the quantity demanded of a related good at a specific price. 
C)  ratio of the price elasticity of a normal good to the price elasticity of a related good. 
D)  change in income due to a change in the price of a related good.

Question 10

The income elasticity of demand of a normal good is:

Accepted Answer

A)  between -1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0. 
A)  between -1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0.

Question 11

If total revenue goes up when price falls, the price elasticity of demand is said to be:

Accepted Answer

A)  price inelastic. 
B)  unit price elastic. 
C)  price elastic. 
D)  positive. 
A)  price inelastic. 
B)  unit price elastic. 
C)  price elastic. 
D)  positive.

Question 12

Use the following to answer question(s):  
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?

Accepted Answer

A)  -0.25 
B)  -0.33 
C)  -0.43 
D)  -0.52 
A)  -0.25 
B)  -0.33 
C)  -0.43 
D)  -0.52

Question 13

In examining the concept of price elasticity of demand, it is seen that if:

Accepted Answer

A)  price and quantity change in the opposite direction, then demand is price elastic. 
B)  price and total revenue change in the opposite direction, then demand is price inelastic. 
C)  price and total revenue change in the opposite direction, then demand is price elastic. 
D)  price and total revenue change in the same direction, then demand is price elastic. 
A)  price and quantity change in the opposite direction, then demand is price elastic. 
B)  price and total revenue change in the opposite direction, then demand is price inelastic. 
C)  price and total revenue change in the opposite direction, then demand is price elastic. 
D)  price and total revenue change in the same direction, then demand is price elastic.

Question 14

Along the lower half of a linear demand curve, the price elasticity of demand will be:

Accepted Answer

A)  price inelastic. 
B)  price elastic. 
C)  unit price elastic. 
D)  positive. 
A)  price inelastic. 
B)  price elastic. 
C)  unit price elastic. 
D)  positive.

Question 15

The price elasticity of demand for ground beef has been estimated to be -1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things unchanged?

Accepted Answer

A)  total expenditures will remain unchanged 
B)  total expenditures will fall by more than 1 percent 
C)  demand will fall by 1 percent, but total expenditures will fall by less than 1 percent 
D)  total expenditures will rise 
A)  total expenditures will remain unchanged 
B)  total expenditures will fall by more than 1 percent 
C)  demand will fall by 1 percent, but total expenditures will fall by less than 1 percent 
D)  total expenditures will rise

Question 16

Use the following for questions 124-127.
Exhibit: Estimating Price Elasticity
  
-(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, which demand curve has the lowest price elasticity (absolute value)?

Accepted Answer

A)  D₁ 
B)  D₂ 
C)  D₃ 
D)  D₄ 
A)  D₁ 
B)  D₂ 
C)  D₃ 
D)  D₄

Question 17

Given a linear demand curve, we would expect that as we move down the curve from left to right that:

Accepted Answer

A)  total revenue will fall throughout. 
B)  total revenue will rise throughout. 
C)  total revenue will change depending on the price elasticity, which changes along the curve. 
D)  total revenue will equal zero at the midpoint of the curve. 
A)  total revenue will fall throughout. 
B)  total revenue will rise throughout. 
C)  total revenue will change depending on the price elasticity, which changes along the curve. 
D)  total revenue will equal zero at the midpoint of the curve.

Question 18

The terms elastic and inelastic apply to and are used to describe:

Accepted Answer

A)  price elasticity of demand. 
B)  income elasticity of demand. 
C)  cross price elasticity of demand. 
D)  all of the above. 
A)  price elasticity of demand. 
B)  income elasticity of demand. 
C)  cross price elasticity of demand. 
D)  all of the above.

Question 19

According to the Case in Point on price elasticity of home water demand in Phoenix, the researchers Yoo, Simonit, Kinzig, and Perrings found that:

Accepted Answer

A)  the absolute value of the price elasticity of demand was higher in the short run than in the long run. 
B)  the absolute value of the price elasticity of demand was lower in the short run than in the long run. 
C)  people can adjust more easily to changes in the price of water in the short run than in the long run. 
D)  low-income/low water-users are less responsive to price changes than are high-income/high water-users. 
A)  the absolute value of the price elasticity of demand was higher in the short run than in the long run. 
B)  the absolute value of the price elasticity of demand was lower in the short run than in the long run. 
C)  people can adjust more easily to changes in the price of water in the short run than in the long run. 
D)  low-income/low water-users are less responsive to price changes than are high-income/high water-users.

Question 20

The price elasticity of demand measures the ratio of the percentage change in demand to the percentage change in price.

Accepted Answer

A) True 
 B)False

To say that two goods are complements, their cross price elasticities of demand should be:

The cross price elasticity of demand for complements is:

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then, for you, shoes are considered a(n):

The price elasticity of supply for a good is 3 if:

Use the following for questions 128-130. Exhibit: Nonlinear Demand Curve -(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

The arc price elasticity of demand method is best used for:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

The concept of cross price elasticity of demand refers to the:

The income elasticity of demand of a normal good is:

If total revenue goes up when price falls, the price elasticity of demand is said to be:

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?

In examining the concept of price elasticity of demand, it is seen that if:

Along the lower half of a linear demand curve, the price elasticity of demand will be:

The price elasticity of demand for ground beef has been estimated to be -1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things unchanged?

Use the following for questions 124-127. Exhibit: Estimating Price Elasticity -(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, which demand curve has the lowest price elasticity (absolute value)?

Given a linear demand curve, we would expect that as we move down the curve from left to right that:

The terms elastic and inelastic apply to and are used to describe:

According to the Case in Point on price elasticity of home water demand in Phoenix, the researchers Yoo, Simonit, Kinzig, and Perrings found that:

The price elasticity of demand measures the ratio of the percentage change in demand to the percentage change in price.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

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Exam 5: Elasticity: a Measure of Response

To say that two goods are complements, their cross price elasticities of demand should be:

The cross price elasticity of demand for complements is:

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then, for you, shoes are considered a(n):

The price elasticity of supply for a good is 3 if:

Use the following for questions 128-130. Exhibit: Nonlinear Demand Curve -(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

The arc price elasticity of demand method is best used for:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

The concept of cross price elasticity of demand refers to the:

The income elasticity of demand of a normal good is:

If total revenue goes up when price falls, the price elasticity of demand is said to be:

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?

In examining the concept of price elasticity of demand, it is seen that if:

Along the lower half of a linear demand curve, the price elasticity of demand will be:

The price elasticity of demand for ground beef has been estimated to be -1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things unchanged?

Use the following for questions 124-127. Exhibit: Estimating Price Elasticity -(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, which demand curve has the lowest price elasticity (absolute value)?

Given a linear demand curve, we would expect that as we move down the curve from left to right that:

The terms elastic and inelastic apply to and are used to describe:

According to the Case in Point on price elasticity of home water demand in Phoenix, the researchers Yoo, Simonit, Kinzig, and Perrings found that:

The price elasticity of demand measures the ratio of the percentage change in demand to the percentage change in price.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters